Posts Tagged ‘Retail Traders’
Looking for the best intraday FOREX trading strategies? In the foreign exchange market, things move around quite fast. If you want a hand in this, then you must learn to be very precise in choosing your trades. This is a trillion dollar industry that works around the clock, so there is quite an amount of opportunity for the right investor. If you are targeting to do intraday trading, then you must take a look at a few strategies that just might work well for you.
The asking for bids in the foreign exchange market happens in a very short window until the next bid. Usually, the FOREX market will allow a minimum of three pips or percentage in points. You have to be prepared if you are hoping to make something at the end of the day. For each currency pair, there is a wide range of opportunities that are at hand. Try to target fast moving currencies and research on fundamental and technical conditions before initiating a trade.
Be aware that the foreign exchange market does not carry any centralized exchange for trading, which means that pertinent information needed by traders, such as volume and open interest will not be available to them. They have to rely on other fundamental and technical data to be able to make a good trade. Interbank traders, however, have the advantage of seeing the order book at a specific workplace. This is why retail traders have to move faster if they want to be ahead of interbank traders.
Due to the insufficient volume of trades done by intraday traders, whatever investment they pursue will really not have that much effect on the whole market, unlike with larger institutions, such as banks or large financial firms. After all, they have the best intraday FOREX trading strategies.
By: Mike Darwin
The Currency / Foreign Exchange market is the world’s largest and most dynamic market. Nearly $1.8 trillion is traded every day. The word Forex is derived from the words Foreign Exchange.
A Broker is an individual or firm that acts as an intermediary between buyer and seller. Forex brokers are firms that deal in foreign exchange. The foreign exchange market is quite similar to the equity markets, except that typical forex brokers do not charge a commission. However, forex brokers are required to have a license.
Forex brokers earn money from the spread (also called “pip”). The spread is the difference between the prices at which a currency is bought and sold. A pip is the smallest price increment in a currency. For example, in Euro/US Dollar (EUR/USD), a move from 0.9008 to 0.9009 is one pip. In US Dollar/Japanese Yen (USD/JPY), a move from 127.41 to 127.42 is one pip.
Forex brokers can be compared on the basis of the spread they charge. Most forex brokers publish live or delayed prices on their websites so that the investor can compare the spreads. It is, however, necessary to check if the spread is fixed or variable. Variable spreads appear small and attractive when the market is quiet, but when the market gets busy the forex broker widens the spread, meaning that the investor will gain only if the market is favorable.
Forex brokers are usually tied to large banks or lending institutions. This is because of the huge sums of money traded in the foreign exchange markets. Forex brokers are required to register with the Futures Commission Merchant (FCM), and are regulated by the Commodity Futures Trading Commission (CFTC).
A new trend among forex brokers is the emergence of online forex brokers, who offer trading facilities to “retail traders” using advanced technology. With these facilities, anyone with a computer and an Internet connection can trade in the forex markets.
By: Eddie Tobey
Many retail Forex traders are concerned about stop-loss hunting because they are virtually powerless as individuals to defend themselves the powerful “hunters”. In this short article, I’ll explain to you what stop-loss hunting is, and how you can avoid being prey to it.
What Is Stop-Loss Hunting?
Basically, stop-loss hunting is a trading strategy that tries to force retail traders (like you and me) out of our positions by driving the market price to a level where our stop-loss levels are placed. This is a strategy that the investment banks and hedge fund managers adopt because they have the resources to do it.
Simply put, the big financial institutions buy (or sell) a large amount of currency that causes the market price to go up (or down), hitting the retail traders’ stop-loss levels, and causing us to exit the market at a loss. In the meantime, they will gain from our losses.
How Do They Know Where Our Stop-Loss Levels Are Placed?
Usually, this happens when there is an obvious support or resistance line on the trading charts. With a clearly defined resistance level for example, institutional traders will know that many retail traders will place their stop-loss trigger just a few pips above the resistance line.
Your trading brokers will also know exactly where your stop-loss triggers are placed. After all, they provided you with the trading platform, didn’t they? Whenever you place a stop-loss order on your trading platform, the information will be relayed back to your broker, and he will know your exact stop-loss price.
It’s hardly fair game, huh? The odds of profitable trading are highly stacked against you. That’s why you’ll need to fully understand the risks of trading, and how to avoid them.
By: Harold Hsu
What is Forex Trading?
Forex, or Foreign Exchange, is the simultaneous exchange of one country’s currency for that of another. This market of exchange has more daily volume, both buyers and sellers, than any other in the world. Taking place in the major financial institutions across the globe, the forex market is open 24-hours a day.
Currencies are quoted in pairs. The first listed currency is known as the base currency, while the second is called the counter or quote currency. In the wholesale market, currencies are quoted using five significant numbers, with the last placeholder called a point or a pip.
The forex market is one of the most popular markets for speculation due to its enormous size, liquidity, and tendency for currencies to move in strong trends. An enticing aspect of trading currencies is the high degree of leverage available.
Advantages of forex trading
Leverage. Huge leverage is available in Forex trading, often up to 100:1 meaning that large profits can be generated from small margin deposits.
Liquidity. The enormous size and global trading of the forex markets means that the markets in the major currency pairs are very liquid making trade executions almost instant with little slippage.
Ability to go short. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means a trader has equal potential to profit in a rising or falling market.
Trends. Fundamentally, the value of a country’s currency is determined by interest rates and the strength of the economy in relation to other countries. Currencies, therefore, have a greater tendency to trend until the fundamentals change.
Disadvantages of forex trading
Leverage. With huge leverage available to forex traders the danger is that positions which carry too much risk for the account size can be taken on, leading to margin calls. Effective money management rules must be adhered to.
Brokers. Retail traders must use a broker rather than dealing directly in the interbank market. The broker will be the counterparty in all transactions and is, effectively, making the market. They can, therefore, widen spreads or even refuse to trade during volatile trading conditions. To avoid dealing with brokers an alternative to forex is to use futures. See online futures trading for more details.
Spreads. As the retail trader must use a broker to trade, they cannot deal at the interbank rates. A broker will generally quote a fixed spread of 3-20 pips depending on the currency pair. The underlying interbank rate might be as little as 1 pip.
Forex is a very large market but for most retail traders dealing with brokers the odds are shifted against them. Online futures trading provides a much more level playing field for most traders who want to take part in forex trading.
By: Tim Wreford
